Markel (NYSE:MKL) announced third-quarter 2019 results late Tuesday. With shares up more than 4% on Wednesday -- an unusually pronounced move for the relatively stable specialty insurance and financial holding company -- it's clear investors are pleased with its performance.

But that's not to say Markel's headline numbers looked good at first glance. Here's a closer look at the company's latest quarter relative to the same year-ago period:

Metric

Q3 2019

Q3 2018

Change

Operating revenue

$2.033 billion

$2.236 billion

(9.1%)

Net income to shareholders

$205.6 million

$409.4 million

(49.8%)

Net income per diluted share

$13.95

$28.50

(51.1%)

Book value per share

$768.98

$704.70

9.1%

Data source: Markel.

Breaking it down

First, keep in mind arguably the best way to measure Markel's success as a financial holding company is through its change in book value per share -- the one metric that actually shows growth in the above table.

But even then -- and though I don't typically pay close attention to Wall Street's quarterly demands -- it's worth noting most analysts were modeling lower operating revenue of $1.97 billion. We should also keep in mind operating revenue in last year's third quarter was bolstered by a $426.6 million increase in the fair value of equity securities held in Markel's investment portfolio. This quarter, however, that increase was a much more modest $32 million, which helps explain the reported top-line decline. On the bottom line, comprehensive income to shareholders arrived at $250.1 million, down from $315.1 million in the same year-ago period.

Man in suit drawing chart with finger indicating gains.

IMAGE SOURCE: GETTY IMAGES.

At Markel's investing operations, net investment income climbed 6.7% year over year to $113.4 million, driven largely by higher dividends from Markel's increased ownership of equity securities. To be sure, total invested assets climbed to $21.9 billion at the quarter's end, from $19.2 billion at the end of 2018, of which $7 billion (or 32%) was comprised of equity securities (that's up from $5.7 billion, or 30% of invested assets at the end of 2018).

At Markel's insurance operations, earned premiums increased 9.3% to $1.3 billion. And the company achieved a consolidated combined ratio of 94% -- meaning it earned roughly $6 for every $100 in premiums it wrote -- led by a 92% combined ratio from the insurance segment, and 103% on the reinsurance side.

Meanwhile, at Markel Ventures -- a segment comprised of a stable of owned and acquired businesses working outside the specialty insurance niche -- operating revenue grew 5.7% to $496.2 million, driven by a combination of Markel's acquisition of handbag company Brahmin in late 2018 and higher sales from one of its transpiration-related businesses. That sales leverage helped Ventures' operating income jump 50% to $35.5 million.

Finally, Markel's "other operations" segment saw operating revenue rise 59.4% to $91.4 million, as revenue from the company's late-2018 acquisition of insurance-linked securities manager Nephila Holdings was only partially offset by lower revenue at CATCo, with the latter stemming from a reduction of assets under management at the firm.

On Markel's sustainable success

In their usual joint statement yesterday evening, co-CEOs Tom Gayner and Richard Whitt wrote:

Our operating results for the quarter continue to reflect profitable top line growth across the company. We produced a meaningful underwriting profit, despite catastrophes losses during the period, and we're seeing excellent results from our Markel Ventures operations. Our investment portfolio continues to make meaningful contributions to both net income and comprehensive income, driven by favorable market conditions.

During the subsequent conference call, Gayner elaborated on the viability of Markel's three-tiered model (insurance, investments, and Markel Ventures operations):

Now, sustainability is a word one hears a lot these days. We've been saying it for years. We believe that sustainability stems from our values of treating our customers, our associates, and our shareholders the best way we know how each and every day with no exceptions. We believe that the sustainability of Markel stems from our diverse and successful three-engine architecture, which provides multiple ways to be resilient and robust through all sorts of economic environments and individual business unit challenges. There are always external and internal business challenges -- always have been, always will be. At Markel, we've always risen to those challenges and we always will.

Of course, that illustration of Markel's long-term view offers investors invaluable perspective on why management doesn't offer specific quarterly financial guidance -- and this quarter was no different to that end. But as long as Markel continues to lean on the resilience of its business to consistently generate shareholder value and beat the market, you'll be hard-pressed to find any rational investor willing to complain.